a. A company's common stock is currently trading at $26 a share. It is expected to pay an annual dividend of $2.75 a share at the end of the year, and the constant growth rate is expected at 4%. What is the company's cost of common equity if its equity is coming from retained earnings? b. If the company issues new stock, it would face a floatation cost of 12%. What would be the cost of equity from the new stock? One year ago, you purchased a $1.000 par value bonds with a 10-year maturity and 12.5% semiannual coupon. When you purchased the bond, it has an expected yield to maturity of 10%. If you sell the bond for $1, 075 today, what annual rate of return would you have earned over the past year? A firm's common stock currently sells at $32 a share. It just paid a dividend of $2.25 and will pay $2.43 at the end of the year, and its dividends are expected to grow at a constant growth rate. The beta of this firm is .8, the risk-free rate is 7% and the required return on the market is 13%. Estimate the cost of common equity using CAPM and the Gordon model